Degraded U.S. shipbuilding industry hobbles Navy quest for bigger fleet to counter China, Russia

By Joseph Clark - The Washington Times - Monday, July 12, 2021

America’s dwindling domestic shipbuilding industry has lawmakers worried about the Navy’s ability to keep up with China and Russia.

Now that China has surpassed the U.S. to have the world’s largest navy, lawmakers on both sides of the aisle agree that the service must make strides toward building a larger fleet. Reaching the goal, however, is hobbled by a domestic shipbuilding industry that has been in decline since the mid-1990s.  

The Navy currently operates just four public shipyards tasked with maintaining the nuclear-powered fleet and roughly 20 private shipyards certified to build and maintain the service’s conventionally powered ships.

China, by comparison, operates more than 1,200 shipyards to support its navy and commercial fleets, according to an estimate by the Rand Corp.

“Over the past 25 years, the number of Navy shipbuilding suppliers for nuclear-powered submarines and aircraft carriers dropped by more than two-thirds, and more than 65% of remaining suppliers are the single- or sole-source for their product,” Senate Armed Services Committee Chairman Jack Reed, Rhode Island Democrat, and Sen. James M. Inhofe of Oklahoma, the committee’s top Republican, recently wrote in the U.S. Naval Institute’s periodical Proceedings.

The shipbuilding industry’s decline dates to the end of the Cold War, which led to a smaller U.S. military and a reduced supporting industrial base.

“Now that we’re in a new era of great power competition, and where we recognize that we have a growing threat from China and to a lesser extent, Russia, this consolidation of the industrial base has left us with a lack of scope and scale, in order to sort of dramatically increase shipbuilding, or for that matter dramatically increase ship repair,” said Jerry Hendrix, a retired Navy captain and vice president of security consulting firm Telemus Group.

Lawmakers and defense experts say rebuilding the industrial base will require a consistent, long-term commitment to expanding the Navy’s fleet.

The Navy has been inching toward a 355-ship goal, up from its current fleet of 297 ships, under the 2018 National Defense Authorization Act. The legislation was partly intended to counter China‘s growing navy. Adm. Michael Gilday, chief of naval operations, said at a recent House Armed Services Committee hearing that the 355-ship goal was predicated on an assumption of 4.1% top-line growth in the Navy budget over 10 years.

Faced with a proposed top line that lags inflation, this year’s proposed budget called for decommissioning 15 ships and reducing procurement by close to 9%, resulting in a net decline. The result, Mr. Hendrix said, is a signal to the industry that the Navy is not committed to long-term investment.

Mr. Hendrix said shipbuilders such as Huntington Ingalls Industries and Bath Iron Works, which now can produce about one ship per year, could produce three times that number in the 1980s and 1990s. Those companies, he said, don’t have an incentive to increase their output without a strong signal from the Navy that it will continue to invest.

“Neither one of those companies, in looking at the Navy’s budget, is going to make the investment in hiring additional trained workforce to maximize their production capacity,” he said. “There simply isn’t a strong enough signal from the government that the government is serious about growing.”

Mr. Reed and Mr. Inhofe say predictability is key to increasing and stabilizing the shipbuilding industry.

“It should be no surprise that without orders from the Navy, production lines will be halted, workers will be laid off, suppliers will not receive task orders, and shipyards will shrink or close,” they wrote. “This means the Navy may not be able to reconstitute a production line or reopen a shipyard if and when desired, thereby limiting the ability to build a fleet with the capability and capacity future Defense and Navy leaders will need to deter and defeat adversaries.”

The contraction of the shipbuilding industry after the Cold War affected new ship acquisition and the Navy’s ability to service its existing fleet. Brent Sadler, a retired Navy captain and senior fellow for naval warfare and advanced technology at The Heritage Foundation, said in a recent report that 75% of maintenance performed by the Navy’s public shipyards fell more than 30 days behind schedule.

In 2018, the Navy submitted a 20-year, $21 billion plan known as the Shipyard Infrastructure Optimization Plan to bring the four public shipyards up to speed servicing nuclear-powered aircraft carriers and submarines. But the roughly $1 billion per year is not guaranteed, and funding holdups have a ripple effect delaying the upgrades.

The issue of predictability, in other words, affects the industry’s ability to produce new ships and to service the current ships in the fleet.

In response, a bipartisan group of lawmakers in the House and Senate has introduced legislation that would fully fund the $21 billion Shipyard Infrastructure Optimization Plan through the Defense Production Act and allocate an additional $4 billion for private construction and repair shipyards in a one-time allocation.

The Supplying Help to Infrastructure in Ports, Yards, and America’s Repair Docs Act, or the SHIPYARDS Act, was introduced in the Senate by Sen. Roger F. Wicker, Mississippi Republican. It has 17 co-sponsors.

Rep. Robert J. Wittman, Virginia Republican, introduced a similar measure in the House with 15 co-sponsors.

“The importance of our naval assets to our national security and global stability has never been greater, which is why it is so critical that our defense industrial base has the capacity to build and maintain a larger fleet,” said Sen. Susan M. Collins, Maine Republican, one of the co-sponsors of the SHIPYARDS Act. “If we are serious about the United States competing against and deterring China, we have to consider our vital defense infrastructure.”

The legislation gained traction as part of Congress’ debate on President Biden’s American Jobs Plan. Many argued that the investment in the shipyard infrastructure would align with the overall investment in U.S. jobs and infrastructure.

Still, a path forward is not clear.

Several lawmakers in the Congressional Defense Spending Reduction Caucus, led by Rep. Barbara Lee, California Democrat, took aim at the legislation in a letter to Senate Majority Leader Charles E. Schumer, New York Democrat, and House Speaker Nancy Pelosi, California Democrat.

“While we do not deny that in some cases the need for military infrastructure modernization exists, funding for these projects should be debated and determined through the regular defense budgeting process, as it is every year,” the lawmakers wrote in their letter. “Given that spending on the Pentagon is already at one of its highest levels since World War II, there should be ample funding within the Department’s budget to address any issues with military facilities by cutting waste and eliminating unnecessary weapons systems, without tapping into the administration’s infrastructure plan.”


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